Slate Asset Management is buying Annaly Capital Management’s commercial real estate business (ACREG) for $2.33bn (€2bn).

The $6.5bn real estate-focused alternative investment platform said the acquisition of ACREG includes a portfolio of performing real estate loans, debt securities and real estate equity positions.

Slate said the acquisition also includes a $0.4bn portfolio of grocery-anchored real estate assets located in major US markets that will be purchased by Slate Grocery REIT, Slate’s pure-play US grocery-anchored business.

Certain members of the ACREG team including head of commercial real estate Timothy Gallagher and Michael Quinn, the head of commercial investments, will be joining Slate upon closing of the transaction, which is expected by the middle of 2021.

Blair Welch, co-founding partner of Slate Asset Management, said the acquisition of the platform further expands Slate’s core capabilities across the real estate capital stack.

“Combined with our investment platform, sophistication, institutional relationships and operational expertise, we are uniquely positioned to provide creative debt capital solutions in the current market environment. Additionally, we are very excited to have the ACREG team members join us at Slate.”

David Finkelstein, Annaly Capital Management’s CEO and CIO, said: “The commercial real estate business has been an important component of Annaly’s differentiated investment model since 2013.

“This transaction delivers compelling execution for our shareholders and will provide additional capacity to further expand our leadership and operational capabilities across all aspects of the residential mortgage finance market, which has been the cornerstone of Annaly’s strategy since our founding.”

Annaly said it intends to use proceeds from the sale to repay its financing facilities related to the commercial real estate assets being sold and to purchase targeted assets in accordance with its capital allocation policy, which may include investments in Agency assets as well as residential and corporate credit assets.

Annaly anticipates maintaining limited exposure to the commercial real estate sector through opportunistic and efficient strategies within the securities portfolio.

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